Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Financial Accounting Expert

Piepkorn Manufacturing Working Capital Management

After completing the short-term financial plan for next year (at the end of Chapter 16), Gary Piepkorn approaches you and asks about the company’s credit policy, In looking at the competition, most companies in the industry offer credit to customers, so Piepkorn Manufacturing appears to be one of the few companies that doesn’t. Numerous customers have expressed the probability of altering to a different supplier due to the scarcity of credit. Gary is interested in knowing how implementing a credit policy will influence the short-term financial plan for next year. In addition, he would like you to inquire as to the probability of getting enhanced credit terms for the company’s purchases.

To analyze the probable switch to the new credit terms, Gary has asked you to investigate industry standard credit terms and rework the short-term financial plan supposing Piepkorn Manufacturing offers credit to its customers. He would also like to investigate how better credit terms from the company’s suppliers would influence the short-term financial plan.

problems

problem1. You have looked at the credit policy offered by your competitors and have determined that the industry standard credit policy is 1/10, net 45. The discount will start on to be offered on the first day of the year. You desire to examine how this credit policy would influence the cash budget and short-term financial plan. When this credit policy is implemented, you think that 60 percent of customers will take advantage of credit offer and the accounts receivable period will be 24 days. Rework the cash budget and short-term financial plan under the new credit policy and a target cash balance of $80,000. What interest rate are you effectively providing customers?

problem2. You have talked to the company’s suppliers regarding the credit terms Piepkorn receives. Currently, the company obtains terms of net 45. Your suppliers have stated that they would offer new credit terms of 2/25, net 40. The discount would begin to be offered on first day of the year. What interest rate are the suppliers offering the company? Rework your cash budget and short-term financial plan from the previous problem supposing you take advantage of the discount offered.

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M93668

Have any Question? 


Related Questions in Financial Accounting

Assignmentglorious garden lawn service1 prepare the entries

Assignment Glorious Garden Lawn Service 1. Prepare the entries using the list of transactions. Put them in the general journal. 2. Post the journal entries from the general journal to the general ledger. 3. Prepare a tri ...

Topic cash flow statementsfor this assignment you will use

Topic Cash Flow Statements For this assignment, you will use the consolidated financial statements analyze your chosen consolidated financial statements and make recommendations to leadership based on your findings. Writ ...

Rob leslie induced people to invest their savings in a

Rob Leslie induced people to invest their savings in a business venture that he represented to be risky. Because the planned venture never became operational, Leslie never applied the investors' funds in the way he promi ...

Chapter 1 1 which of the following goals of the firm are

Chapter 1 1) Which of the following goals of the firm are synonymous (equivalent) to the maximization of shareholder wealth? A) profit maximization B) maximization of the total market value of the firm's common stock C) ...

Project - transactionsinstructionsthis project is a review

Project - Transactions/Instructions This project is a review of the accounting cycle that has been covered during class. You have two weeks to complete the project. Please prepare all information in a professional manner ...

1 write the journal entries for the following transactionsa

1) Write the journal entries for the following transactions: a) The company acquires $200 of inventory on accounts (does not pay cash) b) The company sells $125 of the $200 inventory purchased in transaction (a) above. T ...

Assignmentpart one working capital analysiscapers inc has

Assignment Part One: Working Capital Analysis Capers, Inc. has just promoted you to Chief financial officer. Since this is a new office in the company, you are understaffed and many of the responsibilities have been assi ...

Assignment audrey jhingrees ice cream parloraudrey jingle

Assignment: Audrey Jhingree's ice cream parlor Audrey Jingle opened an ice cream parlor in a university town. The parlor specializes in ice cream combinations named after popular professors in the business department of ...

Assignmentbullnote some of the assessments in this course

Assignment • Note: Some of the assessments in this course build upon each other, so you are strongly encouraged to complete them in the order in which they are presented. For this assessment, you may use Word or Excel to ...

Is there something in your life that is typically

Is there something in your life that is typically considered credible (product, tradition, performance technique, equipment, etc.) that you believe needs to be critically challenged? What and why?

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen